CCI issued a cease-and-desist notice against the ABFI, finding that it, being the apex body for baseball activities, had abused its position by requesting State Baseball Associations not to entertain unrecognised bodies and not allow players to participate in any of the tournaments organised by such bodies.
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ON June 3, the Competition Commission of India (‘CCI’) delivered its decision in a dispute arising out of a complaint that the Confederation of Professional Baseball Softball Clubs (‘CPBSC’) filed against the Amateur Baseball Federation of India (‘ABFI’). CCI issued a cease-and-desist notice against the ABFI, finding it to be in violation of Section 4 of the Competition Act, 2002; it found that the ABFI, being the apex body for baseball activities, had abused its position by requesting State Baseball Associations not to entertain unrecognised bodies (CPBSC being one such body) and not allow players to participate in any of the tournaments organised by such bodies.
The following is the background to the dispute as well as a breakdown of the CCI’s decision.
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What are the facts of the case?
CPBSC is a not-for-profit working with the sole objective of promotion and development of the sport of baseball and softball in India. ABFI is a registered society and has been recognised as the national sports federation for the sport of baseball, and has all the responsibilities that come with such a burden.
CPBSC was scheduled to organise the Club National 2021 Championship in Hyderabad from February 16-21, 2021 with the object of promoting baseball and also to encourage players to enhance their skills. Eight clubs were shortlisted in the final pool for the event. CPBSC then found out about a letter dated January 7, 2021 that ABFI had sent to State Baseball Associations, prohibiting them from dealing with unrecognised bodies and threatening disciplinary action. Consequently, the clubs that had registered began withdrawing due to the possible repercussions. CPBSC had to cancel the event and announced a revised schedule wherein the event was to be held from March 30 to April 4, 2021.
CCI held that the term ‘enterprise’ pertains to the economic nature of activities discharged by the concerned entity. Whether such activity is undertaken for profit is immaterial: non-commercial economic activities would also be subject to the rigours of the Competition Act.
On March 1, 2021 ABFI issued a communication to its state associations, announcing the conduct of the Senior National Baseball Championship from March 29 to April 3, 2021. CPBSC brought this communication to the notice of the CCI, alleging that it was being organised to sabotage CPBSC, as it was being scheduled around the same time as CPBSC’s now rescheduled event.
CCI considered the information, as well as ABFI’s reply and CPBSC’s rejoinder, and found that there exists a prima facie case of contravention of Section 4 of the Competition Act. An order was passed directing the CCI’s Director General (‘DG’) to investigate the matter. An interim injunction was also passed restraining the ABFI from issuing any communication to state associations restraining them from allowing players to participate in events organised by bodies not recognised by the ABFI.
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What were the findings of the DG’s investigation?
The DG identified three issues for investigation and gave findings as follows:
– What is the relevant market in the present case, and whether ABFI is in a dominant position in the relevant market?
The relevant market was identified as “market for organisation of Baseball leagues/events/tournaments in India”. On dominance, the DG found that ABFI is the apex body for baseball activities in a pyramidal structure, and therefore can be said to be in a dominant position in the relevant market.
– Whether the ABFI has abused its dominant position?
The DG found the letter dated January 7, 2021 sent by ABFI instructing its affiliated units not to allow their players to participate in non-authorised tournaments to be an unfair and discriminatory condition on baseball players and thus, in contravention of the provisions of Section 4(2)(a)(i) of the Competition Act. The restrictions imposed on players from participating in such tournaments is tantamount to contravention of Section 4(2)(b)(i) of the Act. Lastly, the ABFI, by circulating the letter, disrupted the growth of stakeholders in the sport of baseball and hence, the same is in violation of Section 4(2)(c) of the Act.
– Whether there is any violation of Section 3(3) of the Act (this provision deals with horizontal agreements between parties at the same level of the chain)?
The DG found that no contravention of this provision occurred, as there was a vertical relationship between ABFI and the affiliated units, with ABFI being at the top. The same cannot be termed as an agreement between these entities, and does not fall under Section 3(3).
What were CCI’s findings?
CCI noted that CPBSC was aggrieved by the communications sent by ABFI.
ABFI’s preliminary contention was that it was not an ‘enterprise’ within the definition under Section 2(h) of the Act and so it cannot be proceeded against. CCI held that the term ‘enterprise’ pertains to the economic nature of activities discharged by the concerned entity. Whether such activity is undertaken for profit is immaterial: non-commercial economic activities would also be subject to the rigours of the Act. It thus rejected ABFI’s contention.
CCI then examined the issue of abuse of dominant position. It first proceeded to define what the ‘relevant market’ was. For determining the same, CCI is required to have due regard to the ‘relevant geographic market’ and the ‘relevant product market’ by virtue of the provisions in Section 19(5) of the Act. It assessed the product market to be ‘market for organisation of baseball leagues/events/tournaments’, while the geographic market was identified as the whole of India and so the product market was ‘market for organisation of baseball leagues/events/tournaments in India’.
It noted that ABFI is the apex institution for nurturing baseball talent in India. Since its inception, it has organised various activities and tournaments as well selections for teams representing India. It is also the only body recognised by the Union Ministry of Youth Affairs and Sports, the International Baseball Federation, and the Indian Olympic Association. The dominance of ABFI is therefore clearly established.
The best way forward for the sport of baseball in India is for both these bodies to co-operate with each other, instead of competing. Baseball in India is still at a level where it requires as much exposure as possible, so ABFI’s conduct strikes one as embarrassing and unnecessarily power-hungry.
Regarding the abuse of its position, CCI first dealt with a plea raised by ABFI stating that it had not given effect to the letter dated January 7, 2021. CCI held that this plea is baseless and factually incorrect. ABFI’s conduct subsequent to the letter of January 7, 2021, which included issuance of another communication in March 2021, involved using its position to sabotage CPBSC’s events. It held that once an entity is found to be dominant, the mere fact that such restrictions are imposed comes within the framework of Section 4 of the Act. It also rejected ABFI’s plea that the matter is based on hearsay evidence – seeing as there is clear documentary evidence supporting the information.
CCI held that by issuing the letter dated January 7, 2021, ABFI has violated provisions of Section 4(2)(c) of the Act as it results in a denial of market access to other associations. Such conduct of ABFI also results in limiting the provision of services and the market therefor, and violates Section 4(2)(b)(i) of the Act. Lastly, since the communication threatens strict action against players who participate in such tournaments not recognised by ABFI, such conduct imposes an unfair condition on the players, and thus violates Section 4(2)(a)(i) of the Act.
What was the order passed?
The CCI thus found ABFI in contravention of provisions of Section 4 of the Act, and directed it to cease and desist from indulging in future conduct found to be in violation of the Act.
However, since during the proceedings, ABFI undertook to withdraw the impugned letter, the CCI opted to take a lenient view when it came to imposition of penalty as the necessary market correction had already taken place – with CPBSC having also successfully conducted its tournament from February 8 to 13 this year.
What lies ahead?
ABFI, being founded in 1985, is an old organisation in Indian Baseball, while CPBSC has been recently formed and is looking to expand aggressively. The best way forward for the sport of baseball in India is for both these bodies to co-operate with each other, instead of competing. Baseball in India is still at a level where it requires as much exposure as possible, so ABFI’s conduct strikes one as embarrassing and unnecessarily power-hungry. This is not surprising, however, as sports bodies in India are replete with power-hungry administrators who prioritise short-termism over the long-term development of sports.
